Quarterly Productivity Numbers: Ignore Them

[Hannah Bell]

In general this is a good rule. The data are highly erratic and subject to very large revisions.

...this NYT article is especially off base for presenting comments about the strong productivity performance reported for the second quarter. Productivity growth is especially erratic around downturns...

The reason the numbers are erratic is that the recorded rate of productivity growth has everything to do with the timing of layoffs. If businesses wait a quarter or two and keep workers on the payroll who aren't doing anything, then productivity looks bad over those quarters. When they do get laid off, productivity suddenly looks great.

The moral of this story is there is no longer term takeaway about yesterday's data on productivity growth.

--Dean Baker

http://www.prospect.org/csnc/blogs/beat_the_press

[Indenturedebtor]

1. Mmmm that and "productivity" is all about squeezing blood from stone

I know.. I do the work of 4 people.